Remember that time you bought a multipack in the supermarket, because it was cheaper than buying a single item? This is cognitive bias in action. At the time, you might have thought you were making a rational decision - after all, you got a good deal. But did you actually get a good deal? In this particular scenario, you would have ended up spending more money on items you had no intention of buying.
When it comes to buying products/services, while we like to think we make calculated and sensible decisions, we often buy with emotion. It’s nice to think we’re in control, and while rational thinking does play a part in the buying process (usually you internally justify it’s money well spent), it’s your unconscious mind that makes decisions. And this is often influenced by cognitive bias.
What is cognitive bias?
Behavioural Economics describes it as:
A cognitive bias is a systematic (non-random) error in thinking, in the sense that a judgement deviates from what would be considered desirable from the perspective of accepted norms or correct in terms of formal logic.
As a marketer, being aware of these cognitive biases can be a really powerful tool. By understanding how people make decisions and, more importantly, what can influence those decisions can help you to create campaigns that achieve results.
There are plenty of historical experiments and studies which show the power of cognitive bias. Richard Shotton, author of The Choice Factory, shared some interesting examples in his article in the Guardian which include:
The Pratfall Effect: a study which showed the real power of ‘flaws’. Psychologist Elliot Aronson discovered the bias. In his experiment he recorded an actor answering a quiz. The actor answered 92% of the questions correctly, and afterwards spilled a cup of coffee on himself (the pratfall). Aronson played the recording back to two groups of students, and showed some the recording without the coffee spillage and others with it. The students thought the clumsy person was more likeable. This concept is all about people engaging with other people (or brands) that feel more genuine, and when you admit a flaw you ultimately become more human. You can see the Pratfall Effect in modern-day advertising, and it’s something many marketers use to show a brand’s authenticity. Advertising with negative reviews, or calling out some of the reasons why a brand isn't perfect are just some of the ways this has been used in previous ad campaigns.
Using cognitive bias to influence
Whether it’s getting people to change their shopping habits, shift their daily routine or simply buy your product/service, your marketing campaigns will have one goal in common: changing behaviour. So how can you use psychology to create change and drive conversions?
This term refers to first impressions and perception of value. The theory suggests that in a specific situation (like when you first encounter a new product) your brain anchors to the first thing it sees, and will then judge subsequent experiences based on this initial anchoring moment. For example, if you see a product priced at £9.99, you will anchor to this price and you’ll then judge similar products based on its value. So if the next time you see a similar product that’s less than £9.99, you’ll think it’s a good deal because you’ve already seen it at a higher price somewhere else. And this works on anything from price points and percentages to brand identity (we all know the saying ‘first impressions count’).
This well-known marketing technique originated from the 1974 study by psychologists Amos Tversky and Daniel Kahneman. Their experiment involved two groups of students who were asked to solve a mathematical equation based on a list of numbers they were given. Both groups were asked to estimate the answer, but the experiment was never intended to test the students’ accuracy. Instead, the test looked at anchoring bias. It found the students who had a list that started with a lower number guessed a low outcome, and the group that had a list that started with a higher number guessed a high outcome. In summary, they were influenced by the first number they saw.
This is something most of us can relate to. Let’s go back to the start of this article, because I guarantee this would have happened to you at some point. You go into a shop and have every intention of buying one chocolate bar that’s priced at 50p. But then you see a multipack of three next to it that’s priced at £1. Despite the fact you don’t need the extra two chocolate bars you would probably buy the multipack because the perceived value is so much more (you get more for your money). This is also a tactic many clothing retailers use, slashing the ‘recommended retail price’ to a figure that’s a lot less so you’re persuaded to think you’re getting a bargain. Or on monthly subscription websites where the monthly fee is crossed out and the annual monthly fee is cheaper, so you’re persuaded to spend more in the long-term.
Whatever sector you’re in, you can use anchoring in the same way across your marketing activity. Consumers will always compare products and services, but you can control what they compare your product or service to.
This bias suggests that most people will prefer to avoid loss as opposed to acquire gains. Various studies have revealed that the pain of losing something is twice as strong as the pleasure of gaining something. So if you’ve seen messages like ‘limited-time only’ and ‘don’t miss out’ this is loss aversion at play. If you’re thinking of including loss aversion messaging throughout your campaigns then consider doing it sparingly - people will only act if they genuinely feel there’s something to miss out on. And if you fill their inbox with multiple messages about ‘last chance’ then your communications will become disingenuous.
Framing is all about setting the scene for your customer, and framing something in a specific way for a specific outcome. So facts remain the same, but the way you present them to your customers is different depending on what you want to achieve. You can use positive or negative framing (something is saved vs. something is lost), and the theory has been demonstrated in various scientific studies. Another well-known Kahneman and Tversky experiment found that ‘positive’ framing was more effective, however, it really depends on the product or service you’re trying to promote. By testing different messages around gain or loss, you can start to understand your own audience and what messages resonate.
Do you currently use any of these techniques in your marketing and communications strategy? Follow us on Twitter and let us know what you think.